Under Sections 3(1) it has been stated that the Central Government shall, from time to time, prepare and publish the National Electricity Policy and Tariff Policy, in consultation with the state governments and authority for development of the power system based on optimal utilization of resources such as coal, natural gas, nuclear substances or material, hydro and renewable sources of energy.

Section 4

Section 4 states that the Central Government shall, after consultation with the state governments, prepare and notify a national policy, permitting stand-alone systems (including those based on renewable sources of energy and other non-conventional sources of energy) for rural areas.

Section 61(h & i)

Section 61, 61(h) and 61(i) state that the appropriate commission shall, subject to the provision of this Act, specify the terms and conditions for the determination of tariff, and in doing so, shall be guided by the following, namely, the promotion of cogeneration and generation of electricity from renewable sources of energy; and the National Electricity Policy and Tariff Policy.

Section 86(1)(e)

Section 86(1) and 86(1)(e) state that the state commissions shall discharge the following functions, namely, promote cogeneration and generation of electricity from renewable sources of energy by providing, suitable measures for connectivity with the grid and sale of electricity to any person, and also specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution license.

National Electricity Policy 2005

The National Electricity Policy 2005 stipulates that progressively the share of electricity from non-conventional sources would need to be increased; such purchase by distribution companies shall be through competitive bidding process; considering the fact that it will take some time before non-conventional technologies compete, in terms of cost, with conventional sources, the commission may determine an appropriate deferential in prices to promote these technologies.

Tariff Policy 2006

The Tariff Policy announced in January 2006 has the following provisions:

Pursuant to provisions of section 86 (1) (e) of the Act, the Appropriate Commission shall fix a minimum percentage for purchase of energy from such sources taking into account availability of such resources in the region and its impact on retail tariffs. Such percentages for purchase of energy should be made applicable for the tariffs to be determined by the SERCs latest by April 01, 2006.

It will take some time before non-conventional technologies can compete with conventional sources in terms of cost of electricity. Therefore, procurement by distribution companies shall be done at preferential tariffs determined by the Appropriate Commission.

Such procurement by Distribution Licensees for future requirements shall be done, as far as possible, through competitive bidding process under Section 63 of the Act within suppliers offering energy from same type of non-conventional sources. In the long-term, these technologies would need to compete with other sources in terms of full costs.

The Central Commission should lay down guidelines within three months for pricing non-firm power, especially from non-conventional sources, to be followed in cases where such procurement is not through competitive bidding.

National Rural Electrification Policies, 2006

Goals include provision of access to electricity to all households by the year 2009, quality and reliable power supply at reasonable rates, and minimum lifeline consumption of 1 unit / household/day as a merit good by year 2012.

For villages/habitations where grid connectivity would not be feasible or not cost effective, off-grid solutions based on stand-alone systems may be taken up for supply of electricity. Where these also are not feasible and if only alternative is to use isolated lighting technologies like solar photovoltaic, these may be adopted. However, such remote villages may not be designated as electrified.

State government should, within 6 months, prepare and notify a rural electrification plan, which should map and detail the electrification delivery mechanism. The plan may be linked to and integrated with district development plans. The plan should also be intimated to the appropriate commission.

Gramapanchayat shall issue the first certificate at the time of the village becoming eligible for declaration as electrified. Subsequently, the Gram Panchayat shall certify and confirm the electrified status of the village as on 31st March each year.

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